United Airlines ousts CEO in midst of corruption investigation

Feds investigateairline's dealingswith N.Y.-areaairport officials

New Jersey Senate President Steve Sweeney, left, and Gov. Chris Christie listen to United Airlines CEO Jeff Smisek at Newark Liberty International Airport in 2013.

Photo: Mel Evans, STF

United Airlines said Tuesday that its chief executive officer, Jeff Smisek, and two other senior officials had stepped down in the midst of a federal corruption investigation.

The Chicago-based airline is under investigation by the U.S. attorney in New Jersey over whether it had improperly sought to influence senior officials at the Port Authority of New York and New Jersey.

The company said it had named Oscar Munoz as president and chief executive to replace Smisek, the company's chief executive since it merged with Houston-based Continental Airlines in 2010.

"The departures announced today are in connection with the company's previously disclosed internal investigation related to the federal investigation associated with the Port Authority of New York and New Jersey," the company said in a statement. "The investigations are ongoing and the company continues to cooperate with the government."

In February, federal prosecutors issued subpoenas focused on whether the former chairman of the Port Authority, David Samson, had pushed United to reinstate flights that he used to travel to and from his weekend home in South Carolina.

United began an about twice-weekly direct flight from Newark to Columbia that began after Samson became chairman and was canceled days after he resigned last year.

The Port Authority runs several airports, including Newark Liberty International Airport, one of United's biggest hubs. United was seeking big improvements to the airport around the time the airline launched the direct flight to Columbia.

Samson was appointed by Gov. Chris Christie of New Jersey in 2010. He stepped down in March 2014 when records showed that several senior aides to Christie worked with Port Authority officials to close down lanes of the George Washington Bridge under false pretenses to punish a mayor.

Several months ago, United asked the law firm Jenner & Block to conduct an internal investigation into the airline's dealings with Samson and the Port Authority.

At the time, lawyers close to the case predicted that this would lead to the resignation of Smisek and possibly other executives, in the hopes that the airline itself could avoid prosecution.

Two other execs resign

On Tuesday, United's executive vice president for communications and government affairs, Nene Foxhall, and the senior vice president for corporate and government affairs, Mark Anderson, also resigned, the company said.

Foxhall and Anderson were among the United officials whose communications with the Port Authority had been subpoenaed.

Foxhall was a Houston Chronicle reporter from 1976 until 1990.

Karen Kessler, a spokeswoman for Samson's lawyers, said they had no new information about the federal investigation, and she declined to say what it might mean for Samson. "This is a United matter," she said.

Smisek has been under pressure for several years, as United was slow to return to profitability and also suffered several embarrassing computer outages that led to large numbers of delays and canceled flights. In fact, United' website stopped working for 2½ hours Tuesday, prompting the carrier to guide passengers to mobile apps and airport kiosks to check in for flights.

A filing Tuesday with the Securities and Exchange Commission described the terms of Smisek's separation agreement. He'll receive a separation payment in the amount of $4,875,000, and remain eligible for a pro-rated bonus. Smisek will have health insurance until he is eligible for Medicare, and maintain flight benefits and parking privileges for the remainder of his lifetime. He also gets to keep his company car.

Smisek, 61, also agreed to cooperate fully with United "in the defense, prosecution or conduct of any claims or investigations which relate to events or occurrences that transpired" while Smisek was employed.

Continental merger

Smisek was the architect of the 2010 combination between Continental and former United parent UAL Corp. The Harvard Law School graduate has a reputation for taking chances and being blunt. At Continental, as he wooed the larger United away from a planned merger it was about to announce with US Airways, he famously called then-United CEO Glenn Tilton on his birthday and "told him I was a much prettier girl."

Munoz, 56, was a United board member and chief operating officer at freight railroad CSX Corp. Another director, Henry Meyer III, was named non-executive chairman.

In a letter to employees, Munoz said the company had an "incredible opportunity" to increase earnings and improve the flying experience. "It is certainly a new chapter for United," Munoz said on a conference call Tuesday, "and I hope to make you as optimistic as I am about this airline.